 WILLIS
GROUP HOLDINGS
Bank of America Merrill Lynch Insurance Conference
February 16, 2012
Joe Plumeri
Chairman and Chief Executive Officer
Exhibit 99.1 |
 Willis: A
leading global insurance broker Broad range of professional insurance,
reinsurance, risk management, financial and human resource consulting and
actuarial services Global distribution capabilities to meet risk management
needs of large multinational and middle market clients
More than 400 offices in 120 countries, with approximately 17,000 employees
Strong sales culture and relentless focus on cost control
Willis Global Franchise
2011 Commissions and Fees by Segment
Willis Subsidiaries and Associates
2 |
 2011: A
year in transition 2011 challenges
Continued
economic
weakness,
particularly
in
North
America,
U.K.
and
Europe
Rates were soft but less of a headwind in latter half of 2011
Increased operational costs due to:
Continued investment in growth markets
Increased retention award amortization
Reinstatement of salary reviews and 401k match
North America:
Poor performance of Loan Protector
Economy continued to pressure Employee Benefits and Construction
Business lost through M&A and legacy HRH business defections in Q4
Changes in broker compensation in Employee Benefits
International
Significant deterioration of economic conditions in Europe, and UK
Lost business in UK retail business–
including M&A and one-offs
Associates
Gras Savoye performance
3 |
 2011: A
year in transition (cont.) What we achieved
Undertook and completed Company-wide operational review
Aimed at aligning resources and positioning the company for future growth
Total charge of $180m in 2011
Resulting in cost savings of approximately $80m in 2011
Expected annualized savings of ~$135m, ($55 million 2012 benefit)
Reinvesting savings in future growth opportunities
Successfully refinanced debt
Replaced $500m of 12.875% senior notes and $800m bank facility
Reduced interest expense
Extended maturity profile
Increased financial flexibility
Improved capacity to buyback stock
Rolled out revenue initiatives
Sales 2.0
WillPlace
Global Solutions
4 |
 2011: A
year in transition (cont.) What we achieved:
4% reported and 2% Organic C&F growth
Global
-
organic C&F growth of 7% with growth in each business unit
Reinsurance
up high single-digits led by growth in North America
Global Specialties up mid single-digits, led by Energy, Marine and
Aerospace Willis Faber & Dumas and Willis Capital Markets & Advisory
both up mid-single digits International -
organic growth of 5%
Double-digit growth in Latin America and Eastern Europe; high single-digit
growth in Asia Mid single digit growth in continental Europe and low
single-digit decline in UK & Ireland with economic weakness across
much of the region North America -
organic C&F decline of 4%, decline of 2% ex-
Loan Protector
22.5% adjusted operating margin
Down 50 bps from prior year
Adjusted EPS of $2.75, unchanged from prior year
5
See important disclosures regarding Non-GAAP measures on page 24
|
 Commissions and fees:
$3.42 billion (2011)
Average organic growth
2006 –
2011:
Willis 4%
Peers 0%
Annual premiums written:
~$40 billion +
Relationships with more than
5,000 insurance carriers worldwide
Strong track record of organic growth leadership
8%
3%
4%
2%
4%
2%
3%
0%
(1)%
(2)%
(1)%
2%
2006
2007
2008
2009
2010
2011
Willis
Peer Average
6
Note:
Peer
averages
are
based
on
Willis
estimates
using
public
information
from
AJG,
AON,
BRO,
MMC
See important disclosures regarding Non-GAAP measures on page 24
|
 7
Growth driven by new business production
% Organic growth in commissions and fees
6% average net new underlying business 2006 –
2011
See important disclosures regarding Non-GAAP measures on page 24
|
 8
23%
24%
21%
22%
23%
23%
21%
19%
19%
21%
21%
20%
2006
2007
2008
2009
2010
2011
Willis
Peer Average
Strong adjusted operating margins
Average 2006 –
2011 Willis 23% Peers 20%
Note:
Peer
averages
are
based
on
Willis
estimates
using
public
information
from
AJG,
AON,
BRO,
MMC
See important disclosures regarding Non-GAAP measures on page 24
|
 9
Strong cash flow from operations
2011 uses of cash
Dividends (~ $170 million)
Mandatory debt repayments (~$110 million)
Operational review (~$100 million)
Capex (~ $110 million)
2012 expected uses of cash
Similar to 2011, except
Mandatory debt repayments reduce to ~$8
million following term loan refinancing
Share repurchases (up to $100 million)
See important disclosures regarding forward-looking statements on page 23
2011 decline driven by Operational Review cash outflow of ~$100m
|
 10
10
1.3x
1.8x
3.8x
2.7x
2.6x
2.5x
2006
2007
2008
2009
2010
2011
Leverage Ratios Continue to Improve
Debt / Adjusted EBITDA
•
Adjusted EBITDA $915 million in 2011, an improvement of $3 million versus 2010
•
Debt outstanding $2.4 billion as at December 31, 2011, a reduction of $281 million
since 2008 Improvement in leverage ratio reflects improved operating
performance and capital management actions
See important disclosures regarding Non-GAAP measures on page 24
(a)
(a)
Includes impact from acquisition of HRH as of 10/1/2008.
|
 Capital
priorities Reinvestment in the business for future growth
Continue to pay down debt
Aim to reduce Debt/EBITDA to low 2x level
Share repurchase
Announced buyback of up to $100m for 2012
Small “tuck-in”
accretive acquisitions
Dividend
Announced 3.8% increase to annual rate of $1.08 per share
11
See important disclosures regarding forward-looking statements on page 23
|
 *
*
*
*
*
*
12
Looking ahead |
 2012
- driving growth
Continue to realign our business model to further grow the Company
Deliver the Willis Cause
Grow each of our businesses
Nurture growth in North America
Harness growth in International
Maximize the Global businesses
Share repurchase
Small “tuck-in”
accretive acquisitions
Adjusted operating margin expansion & adjusted EPS growth
13
See important disclosures regarding forward-looking statements on page 23
|
 14
Rate environment evolving
See important disclosures regarding forward-looking statements on page 23
Seeing early signs of overall improvement
:
Rates were slightly positive in North America in 4Q2011
January survey of Willis brokers in North America
Property up mid-single digits
Casualty and personal lines up low-single digits
Jan 1, 2012 US reinsurance renewals saw positive rate trend on catastrophe
affected property
Willis is well placed to benefit from improvement in rate environment
North America premium volume of over $13 billion
70% commissions and 30% fees |
 Wrap
up Willis is in great shape
Operational review complete and delivering savings
Revenue initiatives rolled out –
focus on execution
Debt refinanced –
greater flexibility
Strong balance sheet
The right management team in place to lead us forward
Well placed to benefit from rate improvement
15
See important disclosures regarding forward-looking statements on page 23
|
 *
*
*
*
16
Appendix |
 17
Willis North America overview
Segment overview
Extensive retail platform with leading
positions in major markets
Able to leverage industry and specialty
practice group expertise across network
Major practice groups include:
Employee Benefits (approximately
24% of 2011 North America C&F)
Construction (approximately 12% of
2011 North America C&F)
Healthcare
Real Estate/Hospitality
Financial and Executive Risk
Seven geographic regions, with 120 offices
Other includes Canada and Mexico
See important disclosures regarding Non-GAAP measures on page 24
Northeast
13%
Midwest
18%
Western
14%
South
16%
CAPPPS+
12%
Other
7%
Atlantic
20%
2011
commissions
and
fees
–
by
region
2011 North America C&F: $1.32 billion |
 18
Segment overview
2011
commissions
and
fees
–
by
region
Willis International overview
Retail operations in Eastern and Western
Europe, the United Kingdom & Ireland,
Asia Pacific, the Middle East, South Africa
and Latin America
Providing services to business locally in
over 120 countries; leading positions in
UK, Scandinavia, China and
Russia
Offices designed to grow business locally
around the world, making use of the skills,
industry knowledge and expertise
available elsewhere in the Group
International Employee Benefits
generated approximately 12 percent of
2011 International C&F
See important disclosures regarding Non-GAAP measures on page 24
2011 International C&F: $1.03 billion |
 19
Segment overview
2011
commissions
and
fees
–
by
business
Willis Global overview
Reinsurance
Willis Re
One of only three global reinsurance
brokers
Significant market share in major
markets, particularly marine and aviation
Cutting edge analytical and advisory
services, including Willis Research
Network
Complete range of transactional
capabilities including, in conjunction with
Willis Capital Markets & Advisory, risk
transfer via the capital markets
See important disclosures regarding Non-GAAP measures on page 24
2011 Global C&F: $1.07 billion |
 20
Segment overview
2011 commissions and fees
Willis Global overview (continued)
Global Specialties
Strong global positions in
Aerospace/Inspace
FINEX and Financial Solutions –
political risks
and UK financial institutions
Marine
Energy
Construction
Willis Faber & Dumas includes
Faber
&
Dumas
-
wholesale
brokerage
including:
Glencairn
Limited
-
provides
access
to
London
&
Bermuda markets
Niche –
Fine Art, Jewelry and Specie, Bloodstock
and Kidnap & Ransom
Global Markets International
-
provides access for
retail clients to global markets
Willis Capital Markets & Advisory
Advises on M&A and capital markets products
See important disclosures regarding Non-GAAP measures on page 24
2011 Global C&F: $1.07 billion |
 21
See important disclosures regarding forward-looking statements on page 24
The Willis Cause |
 22
Delivering the Willis Cause
See important disclosures regarding forward-looking statements on page 24
Deliver the Willis Cause -
our value proposition to clients –
more consistently and
efficiently. Initiatives include:
Client Advocates to deliver all aspects of the Cause to clients
Growing new business through:
Global Solutions to grow our share of the Global 1,220 accounts
Sales 2.0, our industry focused middle market sales initiative
Recruiting talent
Delivering the best markets, price & terms for our clients:
WillPlace
Willis Quality Index
Continue implementation of target operating models
Service & claims metrics to focus resources on client delivery
Continually orienting our culture around Delivering the Willis Cause
|
 23
Important disclosures regarding forward-looking statements
This
presentation
contains
certain
“forward-looking
statements”
within
the
meaning
of
Section
27A
of
the
Securities
Act
of
1933,
and
Section
21E
of
the
Securities
Exchange
Act
of
1934,
which
are
intended
to
be
covered
by
the
safe
harbors
created
by
those
laws.
These
forward-looking
statements
include
information
about
possible
or
assumed
future
results
of
our
operations.
All
statements,
other
than
statements
of
historical
facts,
included
in
this
document
that
address
activities,
events
or
developments
that
we
expect
or
anticipate
may
occur
in
the
future,
including
such
things
as
our
outlook,
potential
cost
savings
and
accelerated
adjusted
operating
margin
and
adjusted
earnings
per
share
growth,
future
capital
expenditures,
growth
in
commissions
and
fees,
business
strategies,
competitive
strengths,
goals,
the
benefits
of
new
initiatives,
growth
of
our
business
and
operations,
plans,
and
references
to
future
successes
are
forward-looking
statements.
Also,
when
we
use
the
words
such
as
‘anticipate’,
‘believe’,
‘estimate’,
‘expect’,
‘intend’,
‘plan’,
‘probably’,
or
similar
expressions,
we
are
making
forward-looking
statements.
There are important uncertainties, events and factors that could
cause our actual results or performance to differ materially from those in the
forward-looking statements contained in this document, including the
following: the impact of regional, national or global political, economic, business, competitive, market, environmental and
regulatory conditions on our global business operations, including as a result of
the Eurozone; the impact of current financial market conditions on our results of operations
and financial condition, including as a result of any insolvencies of or other
difficulties experienced by our clients, insurance companies or financial institutions; our ability to
compete
effectively
in
our
industry;
our
ability
to
implement
and
realize
anticipated
benefits
of
the
2011
operational
review
or
any
revenue
initiatives;
material
changes
in
commercial
property
and
casualty
markets
generally
or
the
availability
of
insurance
products
or
changes
in
premiums
resulting
from
a
catastrophic
event,
such
as
a
hurricane,
or
otherwise;
the
volatility
or
declines
in
other
insurance
markets
and
premiums
on
which
our
commissions
are
based,
but
which
we
do
not
control;
our
ability
to
retain
key
employees
and
clients
and
attract
new
business;
the
timing
and
ability
to
carry
out
share
repurchases;
the
timing
or
ability
to
carry
out
refinancing
or
take
other
steps
to
manage
our
capital
and
the
limitations
in
our
long-term
debt
agreements
that
may
restrict
our
ability
to
take
these
actions;
any
fluctuations
in
exchange
and
interest
rates
that
could
affect
expenses
and
revenue;
the
potential
costs
and
difficulties
in
complying
with
a
wide
variety
of
foreign
laws
and
regulations
and
any
related
changes,
given
the
global
scope
of
our
operations;
rating
agency
actions
that
could
inhibit
our
ability
to
borrow
funds
or
the
pricing
thereof;
a
significant
decline
in
the
value
of
investments
that
fund
our
pension
plans
or
changes
or
increases
in
our
pension
plan
liabilities
and
funding
obligations;
our
ability
to
continue
to
manage
our
significant
indebtedness;
our
ability
to
achieve
the
expected
strategic
benefits
of
transactions;
changes
in
the
tax
or
accounting
treatment
of
our
operations;
any
potential
impact
from
the
US
healthcare
reform
legislation;
our
involvements
in
and
the
results
of
any
regulatory
investigations,
legal
proceedings
and
other
contingencies;
underwriting,
advisory
or
reputational
risks
associated
with
non-core
operations
as
well
as
the
significant
adverse
impact
the
non-
core
operations
(such
as
Loan
Protector)
may
have
on
our
operations;
our
exposure
to
potential
liabilities
arising
from
errors
and
omissions
and
other
potential
claims
agai
nst
us;
and
the
interruption
or
loss
of
our
information
processing
systems
or
failure
to
maintain
secure
information
systems.
The
foregoing
list
of
factors
is
not
exhaustive
and
new
factors
may
emerge
from
time
to
time
that
could
also
affect
actual
performance
and
results.
For
additional
information
see
also
Part
I,
Item
1A
“Risk
Factors”
included
in
Willis’
Form
10-K
for
the
year
ended
December
31,
2010,
and
our
subsequent
filings
with
the
Securities
and
Exchange
Commission.
Copies
are
available
online
at
http://www.sec.gov
or
on
request
from
the
Company.
Although
we
believe
that
the
assumptions
underlying
our
forward-looking
statements
are
reasonable,
any
of
these
assumptions,
and
therefore
also
the
forward-looking
statements
based
on
these
assumptions,
could
themselves
prove
to
be
inaccurate.
In
light
of
the
significant
uncertainties
inherent
in
the
forward-looking
statements
included
in
this
presentation,
our
inclusion
of
this
information
is
not
a
representation
or
guarantee
by
us
that
our
objectives
and
plans
will
be
achieved.
Our
forward-
looking
statements
speak
only
as
of
the
date
made
and
we
will
not
update
these
forward-looking
statements
unless
the
securities
laws
require
us
to
do
so.
In
light
of
these
risks,
uncertainties
and
assumptions,
the
forward-looking
events
discussed
in
this
presentation
may
not
occur,
and
we
caution
you
against
unduly
relying
on
these
forward-looking
statements. |
 24
This
presentation contains references to
"non-GAAP financial measures" as defined in Regulation G of SEC
rules. We present these measures because we believe they are of
interest to the investment community and they provide additional meaningful
methods of evaluating certain aspects of the Company’s operating performance from period to period on a basis
that may not be otherwise apparent on a generally accepted accounting principles
(GAAP) basis. These financial measures should be viewed in addition
to, not in lieu of, the Company’s condensed consolidated income statements and balance sheet
as of the relevant date.
Consistent with Regulation G, a description of such information
is provided below and a reconciliation
of certain of such items to GAAP information can be found in our
periodic filings with the SEC.
Our method of calculating
these non-GAAP financial measures may differ from other companies and therefore
comparability may be limited. Important disclosures regarding Non-GAAP
measures Adjusted earnings per share (Adjusted EPS)
is defined as adjusted net income per diluted share.
Adjusted net income
is defined as net income, excluding certain items as set out on
pages 27 and 28.
Adjusted operating income
is defined as operating income, excluding certain items as set out on pages 25 and
26. Adjusted operating margin
is defined as the percentage of adjusted operating income to total revenues.
Adjusted EBITDA
is defined as Adjusted operating income, excluding depreciation
and amortization
Organic commissions & fees growth
excludes: (i) the impact of foreign currency translation; (ii) the first twelve
months of net commission and fee revenues generated from acquisitions; (iii)
the net commission and fee revenues related to operations disposed of in
each period presented; (iv) in North America, legacy contingent commissions assumed as part of
the HRH acquisition and that had not been converted into higher standard
commission; and (v) investment income and other income from reported
revenues, as set out on pages 31 and 32. Reconciliations to GAAP measures are
provided for selected non-GAAP measures. |
 25
Important disclosures regarding Non-GAAP measures (continued)
See related footnotes on page 30
Operating Income to Adjusted Operating Income
2006
2007
2008
2009
2010
2011
(In millions)
FY
FY
FY
FY
FY
FY
Operating Income
$552
$620
$503
$694
$753
$591
Excluding:
2011 Operational review
(a)
-
-
-
-
-
180
FSA regulatory settlement
(b)
-
-
-
-
-
11
Venezuela currency devaluation
(d)
-
-
-
-
12
-
Net (gain)/loss on disposal of operations
4
(2)
-
(13)
2
(4)
Salaries and benefits -
severance costs
(e)
35
-
24
-
-
-
Salaries and benefits –
other
(f)
-
-
42
-
-
-
Shaping our Future expenditure
(g)
59
-
-
-
-
-
Gain on disposal of London headquarters
(h)
(99)
-
-
-
-
-
HRH integration costs
(i)
-
-
5
18
-
-
Other operating expenses
(j)
-
-
26
-
-
-
Accelerated amortization of intangibles assets
(k)
-
-
-
7
-
-
Redomicile costs
(l)
-
-
-
6
-
-
Adjusted Operating Income
$551
$618
$600
$712
$767
$778
Operating Margin
22.7%
24.0%
17.8%
21.3%
22.6%
17.1%
Adjusted Operating Margin
22.7%
24.0%
21.2%
21.8%
23.0%
22.5% |
 26
Important disclosures regarding Non-GAAP measures (continued)
Operating Income to Adjusted Operating Income
See related footnotes on page 30
2010
2011
(In millions)
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
Operating Income
$301
$169
$106
$177
$238
$157
$90
$106
Excluding:
2011 Operational review charge
(a)
-
-
-
-
97
18
15
50
FSA regulatory settlement
(b)
-
-
-
-
-
11
-
-
Venezuela currency devaluation
(d)
12
-
-
-
-
-
-
-
Net (gain)/loss on disposal of operations
-
2
-
-
(4)
-
-
-
Adjusted Operating Income
$313
$171
$106
$177
$331
$186
$105
$156
Operating Margin
31.0%
21.2%
14.5%
21.2%
23.6%
18.2%
11.8%
12.8%
Adjusted Operating Margin
32.2%
21.4%
14.5%
21.2%
32.8%
21.6%
13.8%
18.9% |
 27
Important disclosures regarding Non-GAAP measures (continued)
Net Income to Adjusted Net Income
See related footnotes on page 30
2006
2007
2008
2009
2010
2011
(In millions, except per share data)
FY
FY
FY
FY
FY
FY
Net Income attributable to Willis Group Holdings plc
$449
$409
$302
$436
$455
$218
Excluding the following, net of tax:
2011 Operational review
(a)
-
-
-
-
-
128
FSA regulatory settlement
(b)
-
-
-
-
-
11
Make-whole amounts on repurchase and redemption of
Senior Notes and write-off of unamortized debt costs
(c)
-
-
-
-
-
131
Net (gain)/loss on disposal of operations
3
(2)
-
(11)
3
(4)
Venezuela currency devaluation
(d)
-
-
-
-
12
-
Salaries and benefits -
severance programs
(e)
25
-
17
-
-
-
Salaries and benefits -
other
(f)
-
-
30
-
-
-
Shaping our Future expenditure
(g)
41
-
-
-
-
-
Gain on disposal of London headquarters
(h)
(92)
-
-
-
-
-
HRH financing (pre-close) and integration costs
(i)
-
-
10
13
-
-
Other operating expenses
(j)
-
-
19
-
-
-
Accelerated amortization of intangibles assets
(k)
-
-
-
4
-
-
Redomicile costs
(l)
-
-
-
6
-
-
Premium on early redemption of 2010 bonds
(m)
-
-
-
4
-
-
Adjusted Net Income
$426
$407
$378
$452
$470
$484
Diluted shares outstanding
158
147
148
169
171
176
Net income
per diluted share
Adjusted net income
per diluted share
$1.24
$2.75
$2.66
$2.75
$2.58
$2.70
$2.77
$2.55
$2.67
$2.78
$2.04
$2.84 |
 28
Important disclosures regarding Non-GAAP measures (continued)
Net Income to Adjusted Net Income
See related footnotes on page 30
2010
2011
(In millions, except per share data)
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
Net Income attributable to Willis Group Holdings plc
$204
$89
$64
$98
$34
$85
$60
$39
Excluding the following, net of tax:
2011 operational review charge
(a)
-
-
-
-
69
12
11
36
FSA regulatory settlement
(b)
-
-
-
-
-
11
-
Net (gain)/loss on disposal of operations
-
3
-
-
(4)
-
-
-
Make-whole amounts on repurchase and redemption of
Senior Notes and write-off of unamortized debt costs
(d)
-
-
-
-
124
-
1
6
Venezuela currency devaluation
(e)
12
-
-
-
-
-
-
-
Adjusted Net Income
$216
$92
$64
$98
$223
$108
$72
$81
Diluted shares outstanding
170
171
171
172
174
176
176
176
Net income
per diluted share
Adjusted net income
per diluted share
$0.57
$0.34
$0.41
$0.54
$0.20
$1.28
$0.37
$0.37
$0.52
$1.27
$0.57
$1.20
$0.22
$0.46
$0.48
$0.61 |
 29
Important disclosures regarding Non-GAAP measures (continued)
Adjusted EBITDA and Debt/Adjusted EBITDA
See related footnotes on page 30
2006
2007
2008
2009
2010
2011
(In millions)
FY
FY
FY
FY
FY
FY
Operating Income
$552
$620
$503
$694
$753
$591
Excluding:
2011 operational review
(a)
-
-
-
-
-
180
FSA regulatory settlement
(b)
-
-
-
-
-
11
Venezuela currency devaluation
(d)
-
-
-
-
12
-
Net (gain)/loss on disposal of operations
4
(2)
-
(13)
2
(4)
Salaries and benefits -
severance costs
(e)
35
-
24
-
-
-
Salaries and benefits –
other
(f)
-
-
42
-
-
-
Shaping our Future expenditure
(g)
59
-
-
-
-
-
Gain on disposal of London headquarters
(h)
(99)
-
-
-
-
-
HRH integration costs
(i)
-
-
5
18
-
-
Other operating expenses
(j)
-
-
26
-
-
-
Accelerated amortization of intangibles assets
(k)
-
-
-
7
-
-
Redomicile costs
(l)
-
-
-
6
-
-
Adjusted Operating Income
$551
$618
$600
$712
$767
$778
Add back
Depreciation
49
52
54
64
63
69
Amortization of intangibles
14
14
36
93
82
68
Adjusted EBITDA
$614
$684
$690
$869
$912
$915
Debt
800
1,250
2,650
2,374
2,267
2,369
Debt / Adjusted EBITDA
1.3
1.8
3.8
2.7
2.5
2.6 |
 30
Important disclosures regarding Non-GAAP measures (continued)
Notes to the Operating Income to Adjusted Operating Income reconciliation and Net
Income from Continuing Operations to Adjusted Net Income from Continuing
Operations reconciliation (a)
$50
million
pre-tax
charge
in
4Q11
($180
million
in
FY2011)
relating
to
the
2011
operational
review,
including
$34
million
of
severance
costs
relating
to
the
elimination
of
approximately
400
positions
in
4Q11
(or
$98
million
of
severance
costs
relating
to
the
elimination
of
approximately
1,200
positions
in
FY2011).
(b)
Regulatory settlement with the Financial Services Authority (FSA).
(c)
Make-whole amounts on repurchase and redemption of Senior Notes and
write-off of unamortized debt costs (d)
With effect from January 1, 2010, the Venezuelan economy was designated as
hyper-inflationary. The Venezuelan government also devalued the Bolivar
Fuerte in January 2010. As a result of these actions, the Company recorded a
one-time charge in other expenses to reflect the re-measurement of its net
assets denominated in Venezuelan Bolivar Fuerte.
(e)
Severance costs excluded from adjusted operating income and adjusted net income in
2008 relate to approximately 350 positions through the year ended December
31, 2008 that were eliminated as part of the 2008 expense review. Severance costs also arise in the normal course of business and these charges
(pre-tax) amounted to $24 million and $2 million for the years ended December
31, 2009 and 2008, respectively. (f)
Other 2008 expense review salaries and benefits costs relate primarily to contract
buyouts. (g)
In
addition
to
severance
costs
and
a
net
loss
on
disposal
of
operations,
the
Company
incurred
significant
additional
expenditure
in
2006
to
launch
its
strategic
initiatives,
including
professional
fees,
lease
termination
costs
and
vacant
space
provisions.
(h)
The gain on disposal of London headquarters is shown net of leaseback costs.
(i)
2009 HRH integration costs include $nil million severance costs ($2 million in
2008). (j)
Other operating expenses primarily relate to property and systems
rationalization. (k)
The charge for the accelerated amortization for intangibles relates to the HRH
brand name. Following the successful integration of HRH into our North
American operations, we announced on October 1, 2009 that our North America
retail operations would change their name from Willis HRH to Willis North
America. Consequently, the intangible asset recognized on the acquisition of
HRH relating to the HRH brand has been fully amortized. (l)
These
are
legal
and
professional
fees
incurred
as
part
of
the
Company’s
redomicile
of
its
parent
Company
from
Bermuda
to
Ireland.
(m)
On September 29, 2009 we repurchased $160 million of our 5.125 percent Senior Notes
due July 2010 at a premium of $27.50 per $1,000 face value, resulting in a
total premium on redemption, including fees, of $5 million. |
 31
Commissions and Fees Analysis (a)
Important disclosures regarding Non-GAAP measures (continued)
(a) Effective January 1, 2011, the Company’s internal reporting structure has
changed. The primary changes are: Global Markets International, previously reported
within the International segment, is now reported in the Global segment. In
addition, Mexico Retail, which was previously reported within the International segment,
is now reported in the North America segment. Comparative data has been restated
accordingly. (b) Included in North America reported commissions and fees were
legacy HRH contingent commissions of $nil million in the fourth quarter of 2011 compared with $nil
million in the fourth quarter of 2010 and $5 million in 2011 compared with $11
million in 2010. (c) Reported
commissions
and
organic
revenue
growth
for
the
twelve
months
ended
December
31,
2011
included
a
first
quarter
2011
favorable
impact
from
a
change
in
accounting
methodology
in
a
Global
Specialty
business
of
$6
million.
2011
2010
Change
Foreign
currency
translation
Acquisitions
and
disposals
Contingent
Commissions
Organic
commissions
and fees
growth
($ millions)
%
%
%
%
%
Three months ended
December 31, 2011
Global
$213
$202
5
(1)
-
-
6
North America (b)
322
346
(7)
-
-
-
(7)
International
281
275
2
-
-
-
2
Commissions and Fees
$816
$823
(1)
-
-
-
(1)
Twelve months ended
December 31, 2011
Global
$1,073
$987
9
2
-
-
7
North America (b)
1,320
1,369
(4)
-
-
-
(4)
International
1,027
937
10
5
-
-
5
Commissions and Fees (c)
$3,420
$3,293
4
2
-
-
2 |
 32
(a)
Effective January 1, 2011, the Company’s internal reporting structure has
changed. The primary changes are: Global Markets International, previously
reported within the International segment, is now reported in the Global segment. In addition, Mexico Retail, which was previously
reported within the International segment, is now reported in the North America
segment. Comparative data has been restated accordingly. (b)
Included in North America reported commissions and fees were legacy HRH contingent
commissions of $11 million in 2010 compared with
$27 million in 2009.
Important disclosures regarding Non-GAAP measures (continued)
Commissions and Fees Analysis (a)
2010
2009
Change
Foreign
currency
translation
Acquisitions
and
disposals
Contingent
Commissions
Organic
commissions
and fees
growth
($ millions)
%
%
%
%
%
2010 Full year
Global
$994
$931
7
-
-
-
7
North America (b)
1,369
1,381
(1)
-
-
(1)
-
International
937
898
4
(2)
1
-
5
Commissions and Fees
$3,300
$3,210
3
(1)
-
-
4
2009
2008
Change
Foreign
currency
translation
Acquisitions
and
disposals
Contingent
Commissions
Organic
commissions
and fees
growth
($ millions)
%
%
%
%
%
2009 Full year
Global
$931
$894
4
(3)
3
-
4
North America (b)
1,381
925
49
-
56
(3)
(4)
International
898
925
(3)
(9)
1
-
5
Commissions and Fees
$3,210
$2,744
17
(4)
20
(1)
2 |
 WILLIS
GROUP HOLDINGS
Bank of America Merrill Lynch Insurance Conference
February 16, 2012
Joe Plumeri
Chairman and Chief Executive Officer |